Mike Maples Jr., general partner of Floodgate Ventures in Palo Alto, has a golden touch for making early investments into successful tech startups.

That skill earned Maples the 19th spot on Forbes’ 2016 Midas list of the most successful venture capitalists for his astute investments which recently included Cruise Automation, a company that sells software and hardware to turn any car into a self-driving car. General Motors paid $1.2 billion to acquire Cruise and the deal is the process of closing, Maples said.

TwitchTV cofounder Kyle Vogt and Daniel Kan founded the company and Maples wrote them an early check to finance the startup despite vociferous objections from his partners at Floodgate.

On Thursday evening, Bob Metcalfe, inventor of Ethernet and professor of innovation at the University of Texas at Austin, interviewed Maples at the 10th Longhorn Startup Demo Day held at the Lady Bird Johnson Auditorium.

During the discussion, Metcalfe asked Maples about his background as an entrepreneur. Maples worked at Tivoli Systems and founded Motive Inc. in Austin before heading to Silicon Valley to become a venture capitalist.

Maples was an early investor in Twitter, Lyft, TwitchTV, Chegg and several Austin-based startups including SpareFoot, Bazaarvoice and Spiceworks.

Maples also recounted how he begged Evan Williams, the founder of Odeo, a podcasting network, to let him invest in the startup. Williams, who founded Blogger and sold the company to Google, was leaving Google to start Odeo.

Maples had never made an angel investment before but he believed in Williams and he was a fan of podcasting.

“A week after my check cleared, Apple decided to give podcasting away on iTunes,” Maples said. “That’s a little bit of a problem when they decide to give it away.” Apple owned 95 percent of the market.

After about a year, Williams said we don’t have a business here and he decided to give investors their money back. Maples agreed to take the money back as long as he could invest in William’s next thing. At the time, Williams was working on a side project called Voicemail 2.0 or Twitter.

He wrote an early check to Williams, the co-founder of Twitter, a micro blogging site in which people write 140 characters or less about what they are doing, even though Williams didn’t have a product road map or revenue model.

Twitter and Cruise both qualify as so-called “Unicorns” or startups with billion dollar valuations, said Metcalfe.

“But you don’t use the term Unicorn,” Metcalfe said. “You use the word Thunder lizard. So what’s the difference between a Unicorn and a Thunder lizard?”

“My basic theory for how I invest is I look for ideas that are highly exponential. So a metaphor I like to use is Godzilla,” Maples said. “Godzilla for those of you that don’t know was hatched from radioactive atomic eggs, swarm across the Pacific Ocean and started destroying cities, breathing fire on things and eating train cars like they were sausage links. And I just thought that was kind of a good metaphor for a startup. You start out as this tiny radioactive egg and you turn into this Godzilla creature that destroys everything. My job is to spot radioactive eggs and to determine if they have that energy to morph into something, to mutate.”

Another Thunder Lizard Maples invested in early on is Lyft, the ridesharing company. How did that happen? Metcalfe asked.

Lyft had been experimenting with Zimride and they decided to launch Lyft in 2012 to be a ridesharing service that was approachable for women. Lyft featured friendly drivers and pink mustaches on the car, Maples said. There was one caveat, it may not be legal everywhere, he said.

But that didn’t deter Maples.

Lyft is evolving into a brand that feels like Virgin Air, Maples said. Lyft is seen as the friendlier, nicer alternative to Uber, he said.

In the 1980s, people took a product designed by men for men and painted it pink to try to sell it to women, Metcalfe said.

Originally, Logan Green and John Zimmer, Lyft’s co-founders wanted to make Lyft only for women, but Floodgate Partner Ann Miura-Ko told them that they would be eliminating half the market so they shelved that idea, Maples said.

Metcalfe said Maples has become famous in Austin recently for saying he would no longer invest in on demand products in Austin because the government was too hostile to Transportation Networking Companies and others in the on demand economy.

Metcalfe then brought up Proposition One, a special election to be held in Austin on Saturday. A vote yes, which is what both Maples and Metcalfe advocate, would require the Austin City Council to dump an ordinance they passed last year to require all ride-sharing companies to have their drivers undergo fingerprint background checks. Uber and Lyft have threatened to leave Austin if Proposition One is not passed.

To explain his stance, Maples gave a brief history of capitalism. Two hundred years ago no companies with more than 100 employees existed in the United States, Maples said. Then the railroad and the steam engine came out and people like Rockefeller and Vanderbilt created corporations, he said. That has basically caused our standard of living to increase tenfold in the last 150 years, Maples said.

“I believe that there is a new kind of capitalism emerging and it is no longer managerial capitalism that took years, rather it is networked capitalism,” Maples said.

Network capitalism is driven by two forces of nature: Moore’s Law, which states computing processing power doubles every 18 months and Metcalfe’s Law which is about the value of a network being the square of its number of nodes, Maples said.

“My theory is that around 2007-2008 the iPhone, smartphone, made microprocessor intelligence basically ubiquitous and made connectivity basically ubiquitous and when then happens Moore’s Law and Metcalfe’s law no longer define the computer or tech industry they are now the animating forces of the economy.”

“And so I believe the most valuable businesses in the world are going to be networks,” Maples said. “And I believe the big companies of the world today, if they don’t position themselves to be network-centric, they will fail. I believe that Tesla is a network centric car company. I believe Apple is a network centric phone company. I believe that the twin powers of Moore’s Law and Metcalfe’s Law are what is going to bring abundance to the world in the next 10 or 15 years.”

Lyft and Uber are basically architected from the ground up from those two forces – Metcalfe’s Law and Moore’s Law, Maples said.

“It’s just a superior model,” he said. “It brings abundance to everybody.”

It gives riders more options and lower prices and it gives drivers extra income and jobs and more flexibility, Maples said.

“Ultimately that approach to riding is just on the right side of history,” Maples said. “The people who are against it they can play whatever politics they want but they are just on the wrong side of history.”

Several people in the crowd broke out into applause.

“Ten years from now does anyone doubt that the TNCs are going to be the mainstream mode of transportation in Austin?” Maples asked. That is unless they are replaced by self-driving cars which is another network capitalism thing, he said.

“It’s just a question of how much friction does the local government want to introduce into that playing out,” Maples said. “I’m just against that.”
Fingerprinting doesn’t obey Metcalfe’s Law or Moore’s Law, it’s just some bureaucratic process designed to impede efficiency and abundance, Maples said.

Maples and Metcalfe ended their talk with a hug in honor of Bill Campbell, a legendary Silicon Valley businessman and adviser to many tech leaders. Campbell died last month at the age of 75 from cancer. He was known as Coach Campbell and formerly served as head football coach at Columbia University. Campbell was a hugger and so Metcalfe and Maples embraced to remember him.